A prenuptial, or premarital agreement is a written contract entered into by both parties prior to the marriage.The main purpose is to eliminate court battles over assets and finances in the event of a divorce or separation. It stresses the need to take protective measures well in advance of a marital breakdown, since divorce is one of the most financially destructive events that a person can experience, and can be detrimental to one's future economic and emotional well-being.
The prenuptial agreement contains provisions for the division of property and any rights to spousal support during or after the dissolution of marriage. It protects the separate assets of the parties accumulated before and during the marriage from any claim of the other party,which would not be possible in the absence of such agreement. It acts as a divorce insurance policy.
Therefore, an individual who has spent years building up and establishing his or her business,savings and real estate portfolios will not be exposed to claims against these assets from the divorcing spouse,as long as the prenuptial agreement is in place.
The reality is that approximately 50% of marriages end in divorce. Statistically a divorce is more likely to happen than a major car accident, and is more costly in terms of legal fees, maintenance payments, income loss and property division. If you want to create a business,buy real estate or other assets, the only means by which these assets remain 100% yours in the event of a divorce or other legal dissolution of the marriage is to insist on a prenuptial agreement with your fiance(e).
A prenuptial agreement can be viewed as an insurance policy, which protects and ring fences the individual's assets at all times. People obtain medical insurance to cover health problems, which may never arise.However, since a marriage has a 50% chance of failure, it is absolutely essential to have an ironclad and water tight prenuptial agreement with your fiance(e) before walking up the aisle or appearing before the justice of the peace.
Six elements are required for a valid prenuptial agreement -
(1) The agreement must be in writing.
(2) The agreement must be executed voluntarily, and not under fraud, coercion or duress.
(3) There must be full and fair disclosure of all assets of both parties at the time of execution, with no concealment or undervaluing of assets and income of either party.
(4) The agreement cannot be unconscionable, ie unfair, such as leaving the other spouse with little or nothing.
(5) The agreement must be signed by both parties.
(6) Both parties should be represented by independent legal counsel. This ensures that they have a fair and equal say in the provisions of the Agreement as well as understanding the If any one of these elements are not present, then the prenuptial agreement is not watertight and can be challenged by your estranged spouse.
Child custody, support and visitation issues are not dealt with in the agreement, as courts insist that the childrens' best interests take precedence.
Therefore, whether you believe prenuptial agreements are a significant policy or that they foreshadow an impending breakup, in some instances they can be a life (or money) saver. No one wants to lose half of their savings and assets in the blink of an eye after the breakdown of the marriage. Which is why most celebrities opt to sign them!